Tuesday, 16 October 2012

Osbourne's Employee Share Ownership Scheme

As a signatory to this open letter to Vince Cable, I am republishing the letter as published on Lib Dem Voice this morning.

We, the undersigned, are extremely concerned by the employee share
ownership policy. We call for this bill to be amended to remove the part
where workers have to give up their rights for share-ownership and,
rather, for the proposal to mirror that agreed by the Liberal Democrat
conference in this document.

The proposal appears to allow for workers to give up their rights in return for company shares, as detailed on the HM Treasury website:

Under the new type of contract, employees will be given
between £2,000 and £50,000 of shares that are exempt from capital gains
tax. In exchange, they will give up their
UK rights on unfair dismissal, redundancy, and the right to request
flexible working and time off for training, and will be required provide
16 weeks’ notice of a firm date of return from maternity leave, instead
of the usual eight.

From this we understand that as few as £2,000-worth of shares will
potentially give employers the ability to fire workers at will, where
the worker has absolutely no rights and has to sell the shares back to
the company when they leave, and where the company can determine the
value of those shares.

The model is recommended for start-ups and small companies. Their
shares are unlikely to be traded and, so, have no clear value. How is an
employee to judge the fairness of the offer, let alone be able to
dispose of them with confidence in the value? It seems that the workers
would give up significant rights, whereas the employer has nothing to
lose – they get rid of an employee they don’t want without any comeback
or legal challenge, and also get their shares back at a price they can
determine.

We have been told that employee owner status will be optional.
However, it seems that this could be made compulsory for future
employees in current and new businesses.The HM Treasury website continues:

Employee-owner status will be optional for existing
employees, but both established companies and new start-ups can choose
to offer only this new type of contract for new hires.

The power of an employer, with a job market such as we have today,
should not be dismissed lightly. Potential employees do not have the
luxury of a wide choice of potential vacancies.

The Liberal Democrat Party Constitution states:

Liberal Democrats are committed to fostering a strong and
sustainable economy which encourages the necessary wealth creating
processes, develops and uses the skills of the people and works to the
benefit of all, with a just distribution of the rewards of success. We
want to see democracy, participation and the co-operative principle in
industry and commerce…

We believe this policy goes against not only Liberal Democrat
principles, but principles of decency and honesty in the workplace.

With a loss of rights, the employee will be in a more unstable
employment situation, which can only decrease confidence and spending,
which our economy desperately needs if it is to grow successfully.

This bill appears to be the Conservative party’s way of getting “fire
at will” through the back door. After the work to stop this going
through via the Beecroft recommendations, isn’t it hypocritical to allow
the potential for it in this bill?

There is no doubt that some unscrupulous companies will abuse this
and employees will lose hard won rights. What employee would want,
voluntarily, to give up these rights, for any amount of money? Please
either pull or amend this proposal.